On the Fence About Annuities?

By

Kelly Greene

May 7, 2012 7:30 am ET

Do Americans like the idea of buying annuities to guarantee their retirement income? It depends on how you frame it, according to research released last week by BlackRock, for which Boston Research Group polled 1,035 retirees.

Asked if they would have chosen a steady income stream throughout retirement or a lump sum, 77% of the retirees said they would have taken the regular payments. Another 15% said they would prefer a partial lump sum and partial income stream.

But when asked whether they would prefer to have control of their money or give up that control in exchange for steady, guaranteed retirement income, about 70% said they wanted to stay in control of their assets.

“It’s the same question, and yet now you’ll see a night-and-day difference in response,” says David Laibson, an economics professor at Harvard University. “If you frame annuities as income for life, Americans love annuities. If you frame it with the necessary loss of control, people head for the hills.”

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